In this article, we discuss 12 best non-REIT dividend stocks to invest in. You can skip our detailed analysis of dividend stocks and their overall performance in the past, and go directly to read 5 Best Non-REIT Dividend Stocks To Invest In.
The prevalence of dividends is strikingly widespread, with around 80% of S&P 500 stocks offering regular quarterly payouts. However, not all sectors exhibit equal generosity in their dividend yields. Industries like real estate and energy tend to lead the pack, boasting substantial average yields nearing 4%, while the rapidly growing tech companies tend to be more reserved, offering considerably lower yields, averaging less than 1%.
The year 2023 hasn't been particularly kind to dividend stocks. Specifically, the S&P 500 Dividend Aristocrats, a collection of esteemed companies renowned for their consistent dividend increases, has seen a modest uptick of just 2.57% year-to-date. This pales in comparison to the noteworthy 21.4% return witnessed by the broader S&P 500 index over the same period. However, due to the historically strong performance of dividend stocks, analysts are recommending adding these equities to investors’ portfolios in 2024. Morningstar's chief U.S. market strategist, David Sekera, holds an optimistic view regarding dividend-paying stocks as they enter the year 2024. He believes that these stocks are in a stronger position compared to their standing in the previous year. Here are some comments from the analyst:
“High dividend-paying sectors such as communications, utilities, and real estate are trading at levels well below our fair value estimates. In addition, our U.S. economics team forecasts interest rates will decline over the course of 2024, which will provide a tailwind for dividend stocks, which tend to be more interest-rate-sensitive.”
Within dividend-paying sectors, Real Estate Investment Trusts (REITs) stand out as one of the most sought-after choices. REITs have garnered immense popularity among investors seeking dividends due to their unique structure and inherent income-generating nature. By law, REITs are required to distribute at least 90% of their taxable income to shareholders in the form of dividends, making them attractive for income-seeking investors. According to a report by the National Association of Real Estate Investment Trusts, Listed REITs, comprising equity REITs and mortgage REITs, distributed approximately $63.1 billion to their shareholders. These listed REITs are publicly traded on stock exchanges, making their dividends widely accessible to investors. Additionally, public non-listed REITs, which function similarly to listed REITs but are not traded on public exchanges, paid out around $6.1 billion in dividends throughout the same period.
While REITs are renowned for their dividends, several other sectors in the market also offer solid dividend payouts to shareholders. The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP) are some of the most prominent dividend stocks that have grabbed investors’ attention. In this article, we will discuss some of the best non-REIT dividend stocks to invest in.
REITs offer attractive dividends and relative stability, but they are still subject to market risks, economic downturns, and specific sector-related challenges. Factors like interest rate changes, property market conditions, or industry-specific dynamics can influence their performance. Taking these factors into account, we have compiled a list of non-REIT dividend stocks. For this article, we scanned Insider Monkey’s database of 900+ hedge funds, as of the third quarter of 2023, and identified dividend-paying stocks in sectors distinct from REITs, with a dividend yield above 3% as of December 13. The stocks are ranked in ascending order of the number of hedge funds having stakes in them at the end of Q3.
Edison International (NYSE:EIX) is an American public utility company that operates primarily through its subsidiaries, focusing on electric power generation, transmission, and distribution. The company offers a quarterly dividend of $0.7375 per share and has a dividend yield of 4.33%, as of December 13. It is one of the best dividend stocks on our list as the company has been growing its dividends for 19 consecutive years.
The number of hedge funds tracked by Insider Monkey owning stakes in Edison International (NYSE:EIX) grew to 28 in Q3 2023, from 25 in the previous quarter. The consolidated value of these stakes is over $1.15 billion. With over 13.3 million shares, Pzena Investment Management was the company's leading stakeholder in Q3.
The Clorox Company (NYSE:CLX) is a multinational consumer goods company known for its diverse portfolio of household and professional products. The company holds a 20-year streak of consistent dividend growth and it pays a quarterly dividend of $1.20 per share. As of December 13, the stock has a dividend yield of 3.38%.
In fiscal Q1 2024, The Clorox Company (NYSE:CLX) reported revenue of $1.4 billion, which beat analysts' estimates by $75.8 million. Year-to-date, the company generated $20 million in operating cash flow and it ended the quarter with over $518 million in cash and cash equivalents.
At the end of Q3 2023, 34 hedge funds in Insider Monkey's database owned stakes in The Clorox Company (NYSE:CLX), the same as in the previous quarter. The collective value of these stakes is more than $534.3 million.
The Southern Company (NYSE:SO) is a Georgia-based utility holding company that generates and distributes electricity to millions of customers in the Southeast through its subsidiaries. The company pays a quarterly dividend of $0.70 per share, having raised it by 3% in April this year. Through this increase, the company stretched its dividend growth streak to 22 years, which makes SO one of the best dividend stocks on our list.
As of the close of Q3 2023, 35 hedge funds tracked by Insider Monkey owned stakes in The Southern Company (NYSE:SO), growing from 32 in the preceding quarter. The overall value of these stakes is over $553.2 million. Among these hedge funds, Adage Capital Management was the company's leading stakeholder in Q3.
Duke Energy Corporation (NYSE:DUK) is one of the largest energy holding companies in the US. The company is primarily engaged in providing electric and gas services to customers across several states. It currently pays a quarterly dividend of $1.025 per share and has a dividend yield of 4.30%, as of December 13. The company has been paying regular dividends to shareholders for the past 97 years and also maintains a 12-year streak of consistent dividend growth, which makes DUK one of the best dividend stocks on our list.
In the third quarter of 2023, Duke Energy Corporation (NYSE:DUK) posted revenue of $7.9 billion, which showed a 1.9% growth from the same period last year. The company's operating cash flow for the quarter came in at $7.3 billion.
Duke Energy Corporation (NYSE:DUK) was a part of 39 hedge fund portfolios at the end of Q3 2023, as per Insider Monkey's database. The collective value of these stakes is over $428.5 million.
8. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 39
Dividend Yield as of December 13: 4.37%
American Electric Power Company, Inc. (NASDAQ:AEP) is an American electric utility company that operates as a regulated utility, providing electricity generation, transmission, and distribution services to customers in multiple states. It is one of the best dividend stocks on our list as the company has been making uninterrupted dividend payments to shareholders since 1910 and also maintains a 14-year streak of consistent dividend growth. The company pays a quarterly dividend of $0.88 per share and has a dividend yield of 4.37%, as of December 13.
The number of hedge funds owning stakes in American Electric Power Company, Inc. (NASDAQ:AEP) jumped to 39 in Q3 2023, from 33 in the previous quarter, as per Insider Monkey's database. The total value of these stakes is over $545.4 million. With over 1.2 million shares, Zimmer Partners was the company's leading stakeholder in Q3.
United Parcel Service, Inc. (NYSE:UPS) is a global logistics and package delivery company known for its extensive network and services in the transportation and supply chain management sectors. The company declared a quarterly dividend of $1.62 per share on November 1, which was consistent with its previous dividend. With a dividend growth track record of 21 years under its belt, UPS is one of the best dividend stocks on our list. As of December 13, the stock has a dividend yield of 4.19%.
As of the close of Q3 2023, 42 hedge funds tracked by Insider Monkey owned stakes in United Parcel Service, Inc. (NYSE:UPS), compared with 47 in the previous quarter. The consolidated value of these stakes is more than $1.8 billion.
Texas Instruments Incorporated (NASDAQ:TXN) ranks sixth on our list of the best dividend stocks. The semiconductor manufacturing company currently offers a quarterly dividend of $1.30 per share and has a dividend yield of 3.28%, as of December 13. The company has been raising its dividends consistently for the past 12 years.
At the end of Q3 2023, 53 hedge funds tracked by Insider Monkey owned stakes in Texas Instruments Incorporated (NASDAQ:TXN), compared with 56 in the preceding quarter. These stakes have a collective value of over $2.06 billion.
